Global Economy and Trade Protectionism: Tools, Barriers, and Impacts

This report delves into the global economy and trade protectionism, discussing tools like tariffs, subsidies, quotas, and currency devaluation, and barriers like import licenses, export licenses, and local content requirements. It also explores the impacts of government intervention on free trade and how businesses respond to import competition. Additionally, it covers the characteristics of major foreign trade, how companies deal in foreign exchange, and how free trade improves global efficiency.

Global economy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The global economy is the economy of all the individuals on the planet, it includes all the
activities related to economy which is within the national level or international level. It is
production, consumption, economic management, work in general, and exchange of financial
values. The two words are very typical which is global and international as it is distinguished
from the national economy while the world economy is simply an total of individual countries.
Trade protectionism is a position that some countries follow to save the domestic industries from
foreign rivals. The four primary tools used in trade protectionism are tariffs, subsidies, quotas,
and currency devaluation(Alimahomed-Wilson and Reese, 2021).
MAIN BODY
Trade Protectionism is the point of finishing the poverty, countries who are involved in
international trade are at a stake of growing fast in terms of revenue, innovation, improve
productivity and provide higher income and good opportunities to their employees. Open trade
also supports the falls income unit by providing customers more affordable goods and services.
There are some of the reason due to which government restrict the trade and they are like
Protection of small industries, Protection of national security, Protection of local jobs(Schwab,
2021).
Tradewind can be one of the major solution for this , combining financing, credit protection, and
collection into a single trade finance facility. It provides streamlined, flexible and best in class
services.
Actual effects of government intervention on the free flow of trade, most of the
economist have discussed about the government intervention and according to them it is more
ideological than logical. Trade deficit and surpluses typically force financial and other
economic changes in the affected countries that tend to get rid of the proportionality, the idea
that all the countries lose in a trade war is incomprehensible. This cannot possibly be true not just
because there is overpowering real indication that the countries have benefited from trade
intervention. Tariffs and currency devaluation are not the only forms of trade intervention and
are not the the only ways deformation are introduced into the global trade and capital
flows(Bogdan and Lomakovych, 2021).
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Major tools by which trade is restricted and regulated, there are some of the trade
barriers that are present to restrict and regulate the trade and some of the man-made barriers are
tariffs, import licenses, export licences, import quotas, subsidies,voluntary export restraints, local
content requirement, embargo, currency devaluation and trade restrictions. Most of the barriers
work on the constant principle which is the imposition of some sort of cost on the trade that
raises the price of the traded commodities. When two different countries use trade barriers in
continue the there are possibility of trade war.
Businesses may respond to import competition, it is important to keep a check on
competitors who can can be the biggest rival in the market in terms of trade. To be competitive,
the company must ensure the main focus on the customer and must also understand the rivals
strengths and weaknesses, and at the same time company must maker sure that business complies
with relevant competition laws(Greenwood-Nimmo, Nguyen, and Shin, 2021).
Markets for Foreign Exchange major characteristics are high liquidity, market
transparency, dynamic market, and operating 24 hours. Foreign exchange market is over s global
marketplace that determines the exchange rates for currencies around the world. This is also
known as Forex or even the currency market. Controlling the flow of currencies across
national borders are banning the use of foreign currency within the country, banning locals
from possessing foreign currency, restricting currency exchange to government approved
exchangers, fixed exchange rates and restricting the amount of currency that may be imported or
exported(Svejnar, 2021).
Companies deal in foreign exchange because they need to buy and sell the commodities
in different countries around the world, their primary goal is to avoid losses and to fix the price
of the currency exchange so that they can manage their profit proportion with full guarantee.
Most of the companies uses the USP of better exchange rates than the banks. They are regulated
by the foreign exchange dealer's association of India(FEDAI) and any transaction in foreign
exchange is governed by the foreign exchange management act(FEMA)1999(Lockwood, 2021).
Free trade improves global efficiency by some or the other ways as it increases access to
higher quality, low priced gods, more growth, improves efficiency and innovation, drives
competitiveness and promotes the fairness. Free trade increases the prosperity for Americans and
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the citizens of all participating nations by allowing consumers to but more amount of goods and
with the better quality,products at lower costs. It drives economic growth, advanced efficiency,
increased innovation, and the greater fairness that accompanies a rules based system. These
benefits are very important aspect to keep a check on.
The relationship between foreign trade and international factor mobility is the inability
to addition of adequate access to foreign production factors may impact efficient methods of
domestic substitution , such as the development of secondary for traditional production methods.
To the complementary, factor mobility via foreign direct investment may stimulate foreign trade
because of the need for equipment, components, and complementary goods in the destination
country(Hannah, Roberts and Trommer, 2021).
Critical factors in successful global supply-chain management are Enterprise resource
planning(ERP) systems and electronic data interchange(EDI). There are four successful factors
in the automotive industry which are social and business cultures, technology infrastructure,
physical facilities of suppliers and internal hierarchy structure. SMEs management is simple. It is
governed by one or a few people. Resources like men, machines, materials and money are easily
dominated by a higher authorisation. Their assistance is very important for variety training,
cooperation with provider and customers for quick respondent supply chain
Establishment of successful transportation networks as part of the global supply chain,
it involves the delivery of commodities from the start to end of chain. It is deemed to be
effective, the transportation segment must be managed efficiently. This also includes making
sure the transport and logistics strategy is dynamic and responsive to the demand of the
market(Imamov and Semenikhina, 2021). Transportation is frequently used in the facilitation of
a supply chain. There are some of the seven uses of transportation in supply-chain management
and they are used to reduce cost, to enhance customer service, segment shipment in supply
chain, to synchronize with chain technology, to provide more supply chain options, to
bypass geographical limitations and to boost the economy
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CONCLUSION
In this respective report, it can be concluded that global economy is very important part in the
economy and the trade protectionism is a position which is very important for every country and
every company and the discussion of government intervention on free flow of trade and the tools
which the trade is restricted and regulated also by some man made barriers and how business
respond to the barriers of free flow of trade in the companies and how they respond to import
competition and characteristics of major foreign trade, how company deal in foreign exchange
and how free trade improves the global efficiency.
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REFERENCES
Books and Journals
Alimahomed-Wilson, J. and Reese, E., 2021. The Cost of Free Shipping: Amazon in the Global
Economy. Pluto Press.
Bogdan, T. and Lomakovych, V., 2021. Financialization of the global economy: macroeconomic
implications and policy challenges for Ukraine. Investment Management and Financial
Innovations, pp.151-164.
Greenwood-Nimmo, M., Nguyen, V.H. and Shin, Y., 2021. Measuring the connectedness of the
global economy. International Journal of Forecasting, 37(2). pp.899-919.
Hannah, E., Roberts, A. and Trommer, S., 2021. Towards a feminist global trade
politics. Globalizations, 18(1). pp.70-85.
Imamov, M. and Semenikhina, N., 2021. The impact of the digital revolution on the global
economy. Linguistics and Culture Review, 5(S4). pp.968-987.
Lockwood, E., 2021. The international political economy of global inequality. Review of
International Political Economy, 28(2). pp.421-445.
Schwab, K., 2021. Stakeholder capitalism: A global economy that works for progress, people
and planet. John Wiley & Sons.
Svejnar, J., 2021. Chinas performance and prospects in the world economy. In China and the
West. Edward Elgar Publishing.
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